Team 19

Enterprise Transformation in the Caribbean

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Presented by:

Antonio Carabajal

Bilal Safree

Bowen Wan

Shivam Modi

Shruti Babukumar

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The Problem...

• Common problems: Disruptions, rising input costs, depressed prices
• Additional problems: Small market sizes, high taxes, depreciated currency
• Also, due to limited resources, economy heavily relied on the production of consumer based goods like fruits and produce.
• Jamaica Stock Exchange data:
• 68% of the listed firms incurred losses during the years, half failed to recover
• Number of small businesses filing Consumption taxes went down by 49%

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Jamaica: Before the Plunge

• Jamaican exports used to be dominant in the produce market
• The company relied on 4 major commodities:
• Juices
• Food
• Distribution in the UK
• Ripe Bananas
• Got most of its profits from UK
• Products for the UK were sourced from Africa, Latin America, and Caribbean
• JP Foods had 2154 employees before the Plunge and lost over 50 percent after

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Weather and Regulatory Changes

• In 2005, Hurricane Denis and Emily reduced farm production by 45 percent.
• Tampering at a juice factory forced a product recall and most of Sunjuice’s output experienced cost increase that could not be passed on to customers because of intense price competition.
• In 2006, EU removed protection offered by banana import quota restrictions.
• Hurricane Dean destroyed farms and disrupted snack food and banana trading. Insurance didn’t cover damage costs.

Weather and Regulatory Changes

• Jamaica sold 65 % shareholding in JP Fruit Distributors and began to change the customer profile
• The company established strategic alliances with brands in UK and explored options to reduce dependence on UK and Jamaican markets
• 51 employees were cut from workforce and a joint venture tropical snack factory began operations in Dominican Republic
• Jamaica reacquired businesses sold previously to Dole Foods Co.
• Focus was to drive operational efficiencies, however in 2007 Jamaica Producers lost 479$ million

Stopping the Downturn

• Background:
• Losses in 2008 climbed to $2.86 billion
• Raw material costs increased 32 percent
• Changes in consumer behavior
• The turnaround plan in 2007:
• Sale of non core businesses
• Reduction in administrative expenses and headcount
• Termination of uneconomic contracts and decommissioning of underutilized plants
• Increase in selling prices
• Strategic alliances with branded players
• New management
• Diversification into markets outside of the U.K.

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Stemming the Tide

• Fierce Competition:
• The assets of the Serious Food business
• Hurricane Gustav disrupted 90 percent of banana exports.
• Jamaica Producers
• Halt cultivation and exports of bananas from Jamaica
• Fresh juice manufacturing and banana snack production
• Freight services to the wider Caribbean.
• JP Tropical Foods：Natural snack products by a 600-acre mixed use farm
• Insufficient efforts:
• Extremely adverse sales trends in the U.K. premium foods market
• Inadequate margins

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Stabilizing the Ship

• Background:
• Floods in 2009
• The global financial crisis
• Closed its juice business in the U.K.
• Remaining Businesses:
• JP Europe
• The largest producer of fresh juice in the Netherlands
• Imports fruit, operates a juice extraction and bottling plant
• Operates a freight forwarder and freight consolidator
• JP Tropical
• A snack producer in Jamaica and the Dominican Republic
• Farming in Honduras and Jamaica
• Stated aim: a multinational specialty food company

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Hope in Jamaica

• Jamaica’s business confidence index is at 128.2, well over the 112.8 from last year.
• Consumer confidence index is 114, much higher than 2014’s record of 100.8
• Jamaicans report that 13% of jobs are plentiful, first positive growth since 2008
• JP disposed of it’s Honduran banana farms allowing for Jamaican Producers to increase ripe banana volumes by 32%
• Employment increased with 117 JP Europe workers and 690 employes for JP Tropical Foods

Continuing to Move up

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• Jamaican Producers realize they are making a lot of money by selling their current investments and begin diversifying new businesses and investments
• JP began marketing a more diverse range of produce to major consumers
• JP business booms with the new demand for pineapples, cassava, and coconuts
• JP secures new listings for their produce to be sold with major U.S. retailers
• New strategy to supply high quality value-priced snacks and produce for the Caribbean as well as exotic specialty foods to North America, Europe, and Asia

• Heavy dependence on UK due to high demand. However, that demand could not sustain and the firm started making losses.
• This forced organizational shake up, which induced dynamic strategies
• Commodity produce for U.K. Speciality foods for global markets
• Increased operational efficiency through agile supply chain management
• Improved asset utilization by divesting loss making assets
• From 2004 to 2008, the firm reduced expenses, waste and workforce

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Road to Recovery

Supply Chain Reconfiguration

• Organizational capabilities must be transformed to pursue new opportunities or break out of stagnation and performance decline.
• This transformation involves renewal by way of organizational learning.
• The supply chain Reconfiguration led to:
• Reduced risk from disasters, expanded market scope, higher profits
• Reduced dependence on UK, increased output of other tropical snacks
• Forged strong relationships with critical stakeholders, such as customers and suppliers and vendors and forced direct selling to motorists on the streets

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Post Recovery

• Opened up new sectors like coffee and construction
• Leveraged strategic partnerships with Jamaican shipping industry
• Reaped benefits due to widening of the Panama Canal
• Changed strategy to cope with external pressures and increased efficiency
• Reconfigured the international flow of activities to fit company product and customer profile
• JP Group recovered through fortitude, tenacity and entrepreneurship to build and leverage dynamic capabilities for agile supply chain management.